What kind of investment would yield £20k p.a.?

alba37

brasso wrote: »

I wouldn't call property development "little effort". Doing up houses is very hard work!

If you just mean buying and reselling the same property to take advantage of HPI, well OK but that bubble must start to deflate pretty soon. It's risky.

This week's news about HPI being 10% sounded good but really, compared with the stock market, it's not that great and has a lot of risk and bureaucracy attached. I'd stay away from property as an investment unless you're a professional builder who knows what s/he's doing.

No I didn't mean buying and selling just to gain on HPI exactly. My friend has bought and sold over the last 2 years, and as she is a close friend I know many of the details. I go to viewings, and talk to agents with her. I guess I should have called it renovation? Buying properties, renovating/modernising & selling. I haven't taken notes, but I am sure it's less than a 5 month turn around. No real difference in HPI, over that time. She learns more with each property.

She has now got a good team of tradesman, which simplifies the process. I know 100% that there is very little effort on her behalf to earn £10,000+ per property. (I am not saying none) She does prep work then finishes the property, with some clearing and cleaning in between and at the end. The rest of the time she keeps an eye on things. She has just got 2 properties last week. Not one agent has expressed concern about HPI, and we have seen many in the last few weeks. I don't know if our area is any different from others, but they are desireable areas she buys in. The most difficult part is finding the property in the first instance, as there are always other developers interested.

I have no idea about the stock market, and therefore would find that to be too much of a gamble. If I had £20,000-£30,000 to invest I wouldn't hesitate in doing what my friend does. (she started with les than £20,000)

EdInvestor

FYI, Your friend should be aware that the Revenue regards this kind of buying/renovating/selling on activity as a form of trading, and will be after your friend for tax on her profits sooner or later.

alba37

Hi, thanks Ed. She does have an accountant who does that side of things for her. I think it's all legal and above board.

DavidN83

"If I had £20,000-£30,000 to invest I wouldn't hesitate in doing what my friend does. (she started with les than £20,000)"

- I have £25K sitting in my bank account...I would like to get into this sort of thing but I didn't think this was enough to get started. My dad is a joiner by trade so he could help with renovations.

RayWolfe

Beware of bandwagons.

PosterBoy77

alba37 wrote: »

No I didn't mean buying and selling just to gain on HPI exactly. My friend has bought and sold over the last 2 years, and as she is a close friend I know many of the details. I go to viewings, and talk to agents with her. I guess I should have called it renovation? Buying properties, renovating/modernising & selling. I haven't taken notes, but I am sure it's less than a 5 month turn around. No real difference in HPI, over that time. She learns more with each property.

She has now got a good team of tradesman, which simplifies the process. I know 100% that there is very little effort on her behalf to earn £10,000+ per property. (I am not saying none) She does prep work then finishes the property, with some clearing and cleaning in between and at the end. The rest of the time she keeps an eye on things. She has just got 2 properties last week. Not one agent has expressed concern about HPI, and we have seen many in the last few weeks. I don't know if our area is any different from others, but they are desireable areas she buys in. The most difficult part is finding the property in the first instance, as there are always other developers interested.

I have no idea about the stock market, and therefore would find that to be too much of a gamble. If I had £20,000-£30,000 to invest I wouldn't hesitate in doing what my friend does. (she started with les than £20,000)

This is really just another business. You could invest 20k in building up many different businesses and they could all do well if you are able to put in the time and effort.

In this instance your friend is making a business out of property developing. However, it is not an investment. It could easily become a full-time job.